Modified national insurance for employees assigned to work overseas
16 September 2014
HMRC have noted an error in the current instructions about payment frequency for employees subject to tax equalisation arrangements.
Paragraph 82004 of the PAYE Manual says in sub-paragraph 6 that employers with five or fewer employees subject to tax equalisation arrangements can pay the necessary Class 1 National Insurance contributions on a quarterly basis.
HMRC have now acknowledged that this paragraph is not compatible with RTI. It is not feasible to have a PAYE scheme with a mix of monthly and quarterly payments. Therefore employers who apply the paragraph in their main payroll will have apparent underpayments unless their monthly remittances are less than £1,500 per month.
HMRC apologise for the error. They believe that only a very small number of employers are affected, but they will remove the incorrect paragraph very shortly.